Highest New Entrant

AXA IM's Ismael Lecanu entered our ratings this month as one of the highest new entrants in European bonds with a Citywire + rating.

Over the last three years, Lecanu returned 10.8%, while the average manager in the Bonds – Euro sector returned 5.2% in EUR terms. The fund that is currently contributing to his positive risk-adjusted performance is the AXA WF Euro Credit Total Return A C EUR fund, which he has run since March 2015. The AXA IM Euro Credit Bonds fund is also a contributor to his performance as he managed it from December 2011 to May 2015.

Lecanu has an overweight position in subordinated debt, hybrid and high yield bonds, while the financial subordinated and corporate hybrids exposure was increased from 35% to 41% relative to the fund’s allocations. Some of the amplified exposures are the Caixa Additionnal Tier 1 subordinated issue by the Portuguese-stated owned bank Caixa Geral de Depositos and the high yield bonds from Swiss credit management services group Intrum Justitia.

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Flematti currently sits top of the three-year total return ranking table among a peer group of 258 managers, having significantly outperformed the average manager by with a return of 26% in euro terms.

The Base Investments Bonds Value EUR Dis sub-fund invests in all types of bonds with minimum rating of BBB- . The £183 million fund has been catching the eye of investors recently as it saw an inflow of £46 million during the first half of this year alone. The Ucits fund is currently registered for sale in Switzerland, Luxembourg, Italy and Bulgaria.

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Rising Star

Fund Manager: Paul Gagey, Aviva Investors

Rating: AA-rated in Bonds - Euro

Overview

Moving up the ratings this month is Paul Gagey, who has risen from a Citywire A rating to AA-rated this month. His performance is drawn from the Aviva Rendement Europe fund, which has been under his management since October 2006.

In five year numbers, Gagey has returned 49.5% while the average manager in the Bonds – Euro sector returned 19.2% in euro terms over the same time period.

Gagey is currently viewing the whole market as expensive but has seen the opportunity to strengthen current positions in Belgium multinational insurance company Ageas, which makes up 2.2% of the fund's exposure. The company has its activities centred on Europe and Asia with its UK segment being among the key contributors to the company’s targets. Ageas currently holds the A rating with a stable outlook by S&P and Fitch.

In terms of region, Gagey only has 14% exposed to the UK and is currently 6.9% underweight against the index. On the other hand, France is among the largest bets, making up 27.3% of his allocation, which is an overweight of 6.8 percentage points compared to the index.

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One to Watch

Fund Manager: Lyndon Man, Invesco

Rating: AA rated in Bonds - Europe

Overview

The manager to watch this month is AA-rated Lyndon Man, who has been consistently rated AA by Citywire since becoming eligible in August 2016. He has returned 14.1% over the past three years, while the average manager in Bonds – Europe delivered a return of 6.8% in euro terms.

The duo's largest regional investment is the UK, which accounts for 14.7% of exposure and is a 12.4 percentage point overweight against the fund manager benchmark. The fund is considerably underweight France, which accounts for 13.5% of the managers bets while making up 22.4% of the benchmark’s portfolio.

The pair have a relative value preference for Ireland and Spain over Portugal and Italy. The managers also highlighted their preference for BBB-rated bonds and financials which make up most of the portfolio.

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